US authorities shut Silk Road website, arrest owner (Update 2)

October 2, 2013
by Glenn Chapman

A pile of Bitcoin slugs sit in a box ready to be minted on April 26, 2013 in Sandy, Utah

US authorities said Wednesday that they have busted an online black market for drugs, hitmen, hacker tools and more, arresting the suspected mastermind of a nefarious bazaar called Silk Road.

Federal agents shut down the website, which used a privacy-protecting Tor network and Bitcoin digital currency to shield the identities of buyers and sellers around the world.

Ross William Ulbricht, also known as "Dread Pirate Roberts," was arrested on Tuesday in San Francisco after the website was shut down, the Justice Department said in a statement.

His online moniker appeared to be taken from a character in the film "The Princess Bride."

Prosecutors said they seized approximately $3.6 million worth of Bitcoins in the largest ever seizure of the digital currency.

"The Silk Road website has served as a sprawling black market bazaar where illegal drugs and other illicit goods and services have been regularly bought and sold by the site's users," FBI Special Agent Christopher Tarbell said in a criminal complaint filed in federal court.

From about January 2011, Ulbricht ran a marketplace that hawked heroin, cocaine, LSD and methamphetamine, as well as hacker tools such as software for stealing passwords or logging keystrokes on people's machines, according to court documents.

Prosecutors also charged that in March, Ulbricht tried to hire someone to kill a Silk Road user who threatened to expose the identities of others using the website.

"The defendant deliberately set out to establish an online criminal marketplace outside the reach of law enforcement and government regulation," Tarbell said in the legal filing.

Ulbricht, 29, anonymized Silk Road transactions by using a Tor computer network designed to make it almost impossible to locate computers used to host or access websites.

He also added a Bitcoin "tumbler" to the Silk Road payment system to foil efforts to trace digital currency back to buyers, according to the criminal complaint.

"Silk Road has emerged as the most sophisticated and extensive criminal marketplace on the Internet today," the criminal complaint contended.

"The site has sought to make conducting illegal transactions as easy and frictionless as shopping online at mainstream e-commerce websites."

Prosecutors maintained that Silk Road has been used by thousands of drug dealers to distribute hundreds of kilograms of illegal wares to more than 100,000 buyers and to launder hundreds of millions of dollars in ill-gotten profits.

Silk Road took in commissions ranging from eight to 15 percent of sales, raking in at least $80 million on more than $1.2 billion worth of transactions, the criminal complaint estimated.

Ulbricht controlled the website, serving as "captain" and using a handful of online "administrators" as staff, investigators said.

Federal agents in New York posed as buyers to shop at the website, successfully ordering an array of illegal goods.

As of last month, Silk Road featured about 13,000 listings for controlled substances, with offers coming under headings such as "High Quality #4 Heroin All Rock" and "UNCUT Crystal Cocaine," the legal filing said.

Services for sale at Silk Road included hacking into accounts at Twitter, Facebook or other social networks and tutorials for cracking bank teller machines.

The legal filing also told of Silk Road offers to sell stolen credit card data, forged IDs, and for "hitmen" in 10 countries.

Website seller and buyer guides that were described as including advice about how to avoid getting caught by using tactics such as shipping drugs in sealed plastic containers to avoid scent detection.

Silk Road last year added a "stealth mode" for vendors who considered themselves "at risk of becoming a target for law enforcement," according to the complaint.

As of July of this year, Silk Road had just shy of a million registered users, with 30 percent of them indicating they were in the US and the rest spread about the globe.

A Silk Road "fallout" forum at the Reddit Internet platform sizzled with worry that police tracking down buyers and sellers from the online bazaar.

"I know many of you are freaking out," read a message from 'bassandlights' posted atop the forum.

"Yes. The party is over. However, the only consequences for 99.9 percent of us will be having to look harder for stuff."

The message reasoned that police wouldn't devote resources to chasing down small-time buyers of illicit goods, and that data on Silk Road servers was likely highly encrypted.

"Honestly, I'm still optimistic about all this," another member of the discussion said in a post.

"Opportunistic dum-dums will leap at the chance to set up 'the next Silk Road,' and although few of these imitation sites will be successful, it'll eventually just be a waste of LE's time to try and shut them all down."

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11 comments

Ulbright is a Radical Libertarian like RyggTard and the other traitors who post here.

From his Linkedin page.

I want to use economic theory as a means to abolish the use of coercion and aggression amongst mankind. Just as slavery has been abolished most everywhere, I believe violence, coercion and all forms of force by one person over another can come to an end. The most widespread and systemic use of force is amongst institutions and governments, so this is my current point of effort. The best way to change a government is to change the minds of the governed, however. To that end, I am creating an economic simulation to give people a first-hand experience of what it would be like to live in a world without the systemic use of force.

He sees himself not just as an enabler of street-corner pushers but also as a radical libertarian revolutionary carving out an anarchic digital space beyond the reach of the taxation and regulatory powers of the state.

Should have bought a yacht and army boats, set up in international waters and conduct business in a way that allows him to operate without getting messed up by pirates/national navies.

I don't know,... I'm past all of my super-villain stuff. Lot's of users on here could build a black hole or a super intelligent machine code given enough money and resources. Not that we need those but I, for one, am imagining all kinds of new possibilities from the stuff I read on this website and pre-print servers.

Then again there are some who prefer to waste their time on crazy drugs that we get a "supply" of rather than understanding the natural source of those chemicals and understanding how to manipulate our reality in such a delicate way so as to create these amazing drugs.

The best way to change a government is to change the minds of the governed, however.

His effect on one government was probably to spur the development and refinement of techniques to pierce the veil of anonymity of people like him. In a sense, it's like standing up security. Whatever steps you have taken to hide yourself, they are not enough. You are not able to envision all the ways you might be discovered. Especially when your adversary has lots of resources.

His declaration is ironic, considering the people-abusing users his site attracted. Assuming he believed what he wrote, I wonder how he rationalized his own actions, trying to harm and/or kill people who annoyed him.

I agree with alfie. It seems this guy hinged his entire defense on anonymity. I'll be curious to see what identifying techniques they reveal throughout the trial (if there is one) and how they'll play out in court. They have to prove beyond a reasonable doubt that it was in fact Ulbricht behind these crimes. You can have a lot of circumstantial evidence that individually wouldn't be enough, but cumulatively proves identity to a jury. That's the thing about anonymity as your sole defense, as long as you're hidden you're fine, but once the veil is lifted then everything you've done as your alter ego is on the table.

"FBI Nabs Alleged Silk Road Boss With His Own MethodsOctober 03, 2013 6:00 AM EDT"From a Google profile associated with the account, the FBI learned that Ulbricht had an interest in the Austrian school of economics and the Auburn, Alabama-based Ludwig von Mises Institute. According to the group's website, it functions as a center of Libertarian political and social theory... In a LinkedIn profile accessed yesterday, a user identified as Ross Ulbricht describes himself as an "investment adviser and entrepreneur" and lists his interests as "trading, economics, physics, virtual worlds, liberty."

"The site's webmaster, who identified himself as Dread Pirate Roberts, made regular references to Austrian economic theory and the teachings of Ludwig von Mises to justify Silk Road's existence."

-Although I don't know why you yourself are not an admirer of such anarchistic libertarian virtue ...?

"'Do what thou wilt' shall be the whole of the law.' -a sentiment you share with libertarians. McVeigh and LaVey also were not that far apart in spirit. You're all anarchists. Get together. Have a party. Get to know one another. You want to murder govt employees too don't you?

"'Do what thou wilt' shall be the whole of the law.' -a sentiment you share with libertarians. McVeigh and LaVey also were not that far apart in spirit. You're all anarchists. Get together. Have a party. Get to know one another. You want to murder govt employees too don't you?

The full verse:

"An it harm none, do what thou wiltAn it harm none, do as thou wiltThat it harm none, do as thou wiltDo what you will, so long as it harms none"

Another version:

"DO AS THOU WILT because men that are free, of gentle birth, well bred and at home in civilized company possess a natural instinct that inclines them to virtue and saves them from vice. This instinct they name their honor" François Rabelais 1534